If the investor's margin ratio breaches 0%, a margin call will be triggered. Essentially:For LTC 10x contract, if the loss has reached 90% of the position margin, a margin call will be triggered.For LTC 20x contract, if the loss has reached 80% of the position margin, a margin call will be triggered.

2. What is forced liquidation?

Under cross-margin mode, force liquidation will be triggered if the margin ratio of the account is lower than 0%, which is:10x leverage: the account's equity equals to or less than 10% of the position margin20x leverage: the account's equity equals to or less than 20% of the position margin

After forced liquidation is triggered, all open orders will be cancelled, followed by force-selling of holding positions at the price when the account's equity = 0, until the margin ratio is equal to or larger than 0%.

Under fixed-margin mode, force liquidation will be triggered if the margin ratio of the account is lower than 0%. After forced liquidation is triggered, all the holding positions will be closed at a price to alter the margin to zero (the final price may differ depending on circumstances). The loss will be equal to or close to the initial margin placed for the side of the contract.

Under cross-margin mode, all the positions of all the contracts will be closed when forced liquidation is triggered. All positions of the same side of this contract will be force-closed. While the positions of the other side and other contracts will not be affected.

When forced liquidation is triggered, system will send closing order of all the holding positions to the market at a price to alter the account's equity balance to zero (the price will be shown as the filled price of the liquidation order). However, the final filled price may differ depending on circumstances. If the liquidation order is not fully-filled, it will be displayed in the unfilled orders list. If the liquidation order is fully-filled, it will appear in the filled orders list.

User may check the status of the orders in the liquidation orders list. Once forced liquidation is triggered, the holding positions will be taken over and separated from the user account equity. If the liquidation order is not fully-filled, the unfilled orders will be regarded as bankruptcy positions and will be socialized with the profits made among all users of all futures markets. If the order is fully-filled and there is a remaining balance, the balance will be credited into the insurance fund.

3. Liquidation and risk management rules

Our futures adopts fixed-margin, cross-margin and liquidation price modes. Investors can only choose either fixed-margin or cross-margin mode according to their trading style.

If a user chooses cross-margin mode, the total equity balance in his/her futures account, plus all the realized profits and losses will be used as positions margin (margin ratio = total margin / positions margin - adjustment coefficient). For 10x leverage, the adjustment coefficient is 10%; For 20x leverage, the adjustment coefficient is 20%; When the margin ratio is equal to or below 0, the account will be liquidated. All positions will be force-closed, while liquidation orders remain unfilled will be covered by insurance fund or socialized.

If a user chooses fixed-margin mode, the initial margin required will also be the position margin. (The margin ratio = (position margin + UPL) / initial margin - adjustment coefficient) For 10x leverage, the adjustment coefficient is 10%; For 20x leverage, the adjustment coefficient is 20%; When the margin ratio is equal to or below 0, the account will be liquidated. All positions of the same side of this contract will be force-closed. While the positions of the other side and other contracts will not be affected.

Cross margin mode: all BTC and LTC available in the futures account will be regarded as position margin. The margin amount, therefore, will change according to price fluctuation. When the futures price moves towards a direction which is unfavorable to the investor, the equity of the investor will be decreased. When the margin ratio is equal to or below 0, the account will be liquidated. The loss will be equal to or close to the equity balance of his/her futures account. A user may increase the margin or change the number of contracts to manipulate the leverage multiplier. The higher the margin, the lower the contract number, hence lower leverage multiplier and lower risk of triggering a forced liquidation.

Fixed margin mode: the initial margin will be regarded as the position margin. So, the margin amount remains unchanged even when the futures price fluctuates. When the futures price moves towards a direction which is unfavorable to the investor, unrealized losses occur. (The margin ratio = (position margin + UPL) * avg. opening price * leverage / (face value * no. of contracts) - adjustment coefficient) For 10x leverage, the adjustment coefficient is 10%; For 20x leverage, the adjustment coefficient is 20%; When the margin ratio is equal to or below 0, the account will be liquidated. The loss will be equal to or close to the initial margin placed for the side of the contract.

Liquidation price mode: To avoid volatile market movements which leads to forced liquidation of multiple positions, OKEx futures provides liquidation price mode for investors to minimize the risk. When a user's account is liquidated, all the holding positions will be closed at a price to alter the account's equity balance to zero, instead of market price. This mode can avoid hammering the market and minimize price movements in futures trading. If the liquidated orders are not fully filled after settlement, the unfilled orders will be regarded as bankruptcy positions and will be socialized with the profits made among all users of all futures markets.

If the size of a user’s position or open orders accumulate to a level which poses a clawback threat to the futures trading system or other users, OKEx may request to cancel your orders or close part of your position. As a final measure, OKEx reserves the right to limit or partially cancel the position or orders to reduce the risk in the system.

4. What is insurance fund?

Insurance fund is set up to cover the societal loss generated or to settle incidents in futures trading. The sources of the fund are mainly from OKEx and the premiums after forced liquidations.

5. Societal loss & full account clawback system

OKEX Futures uses a "full account clawback" system to calculate the clawback rate. The system's margin call losses from all three contracts will merged and clawbacks will be calculated according to each user's entire account profit, instead of calculating each contract's margin call loss and clawback separately. Only users that have a net profit across all three contracts for that week will be subject to clawbacks. Clawbacks will only occur if the insurance fund does not have enough funds to cover the system's total margin call losses.

Settlement and delivery of the three contracts (weekly, bi-weekly & quarterly) occurs at 16:00 every Friday (Hong Kong time).